What happens if I cancel my Professional Indemnity cover? Can I do without it?

If you sell your car you can stop insuring it; motor vehicle insurance covers risks on an “occurrence” basis and once the car is gone so is the risk.

Professional Indemnity is different.

Professional Indemnity works on a “claims made” basis and you must have insurance in place at the time a claim is made against you. This means that even if your business has wound down or you have ceased providing service entirely, you still carry ongoing exposure for past work.

Example:

Work for a client is completed on 04 February. Your Professional Indemnity Insurance is due for renewal on 20 April but you choose to lapse it.

That client realises on 1 May they were unhappy with the service and alleges problems arising from it have caused them losses so they make a demand against you for compensation.

In this scenario there would be no Professional Indemnity Insurance protection even though insurance was in place when the work was done.